Bretton Woods to the WTO: The Political Economy of the Postwar Order

The idea

The exam's international political economy item asks for the institutions and the ideas behind them, and the anchor's last chapter tells both as one story that the unit's earlier entries set up. The ideas first. In the absolutist era wealth was thought finite, a fixed stock of precious metal, and mercantilist monarchs protected their hoards with tariffs and monopolies. The Enlightenment and the Industrial Revolution brought the possibility of wealth creation, and Adam Smith defined it: markets, the division of labor, and a limited role for government, which promoted trade liberalization in Europe. The institutions second. At the end of the Second World War the United States, Britain and others met at Bretton Woods and created two international financial institutions, the International Monetary Fund for stability and cooperation and the World Bank for development loans; a third, the International Trade Organization, was never founded, so participants signed instead the General Agreement on Tariffs and Trade in nineteen forty-seven, which through rounds of negotiation became the World Trade Organization in nineteen ninety-five. Alongside them the Marshall Plan, in the anchor's figure, moved twenty-six billion dollars of recovery aid to Europe and Japan between nineteen forty-six and forty-nine, easing a shortage of international liquidity; the figure is the anchor's and is not converted. The Cold War kept East and West apart, so Western financial powers set the agenda; its end shifted the field toward development and gave the spotlight to modernization theory, an empirically supported hypothesis that economic development correlates with democratization, though the mechanism, the anchor says, is not yet uncovered. Since the nineties three issues have led: globalization and trade, finance and crises, and exchange-rate regimes, fixed, floating, or multilateral within margins. And the argument that closes the chapter is left as the anchor leaves it: many authors hold that capitalism's wealth-making mechanism also produces poverty, inequality and environmental crisis, and they divide between degrowth, cutting production and consumption, and sustainable development, growth reconciled with the environment through innovation and regulation. Mercantilism, Smith, Bretton Woods, GATT to WTO, modernization, and the open debate: that is the sequence the exam can ask in any order.